Following a series of cuts throughout 2025 that provided relief to borrowers and stimulated the residential property market, the RBA announced on March 17th that the cash rate will increase from 3.85% to 4.10%. This decision comes as headline inflation rose to 3.8% in January 2026, with recent Middle East conflict driving substantial fuel price increases that may further contribute to inflationary pressures.
Homeowners with variable rate mortgages can expect increased repayments, while first-home buyers face further deterioration in affordability as home-buying budgets are reduced. However, investors may benefit as rental demand strengthens when sales market affordability declines, with CPI rents often trending in parallel with the cash rate.
Despite this rate increase, Australia's market fundamentals remain unchanged. Population growth, demographic changes, and chronic supply shortages continue to maintain pressure on prices in both sales and rental markets across Australian cities. The underlying strength in population growth and economic activity will continue to drive fundamental demand for housing, suggesting any softening in market activity may be temporary.
